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DoD Releases Annual Cost of Corrosion for Military Infrastructure and Equipment

The DoD Office of Corrosion Policy and Oversight has released two new reports in its series of broad-based, landmark studies on the cost of corrosion for all military equipment and infrastructure. One report estimates the cost of corrosion for military infrastructure and equipment. The second report updates a study of the cost of corrosion for army ground vehicles using more recent data from 2008-2009. (See DoD Releases Annual Cost of Corrosion for Army Ground Vehicles.)

The Corrosion Prevention and Control Integrated Product Team (IPT) completed The Annual Cost of Corrosion for Military Infrastructure and Equipment in July of 2009. LMI Government Consulting prepared the new report, under the aegis of the DoD Corrosion Prevention and Control IPT. Please click on the title above to learn more about the study results. The report is now available to the public.

Cost of Corrosion Highlights—Military Infrastructure and Equipment

The annual cost of corrosion for Department of Defense infrastructure and equipment has been estimated to be between $9 billion and $20 billion. Although the range encompassed by this estimate is large, both figures confirm that corrosion costs are substantial. Congress, concerned with the high cost of corrosion and its negative effect on military equipment, facilities, and infrastructure, enacted legislation in December 2002 that endowed the Office of the Under Secretary for Defense for Acquisition, Technology and Logistics (USD [AT&L]) with the overall responsibility of preventing and mitigating the effects of corrosion on military equipment and infrastructure.

Starting in 2005 under the leadership and sponsorship of the USD (AT&L), and using a method approved by the CPC IPT, LMI conducted a series of cost of corrosion studies. Table 1 shows the results of the completed studies and the plan for future studies. Study segments with potential corrosion costs that have not been analyzed include ammunition, small arms, some communications equipment, Navy and Air Force ground vehicles, and Army watercraft.

The segments listed in Table 1 account for approximately 75 percent of the DoD maintenance costs and a similar percentage of potential corrosion-related costs.

Table 1 - Cost of Corrosion Studies

The method LMI uses to measure corrosion-related cost focuses on direct material and labor costs as well as indirect costs, like research and development (R&D) and training. The corrosion cost estimation is based on a combined top-down and bottom-up approach. The top-down portion uses summary-level cost and budget documentation to establish maintenance spending ceilings for depot and field-level maintenance for both organic and commercial activities. This establishes a maximum cost of corrosion for each area. The bottom-up portion uses detailed work order records to aggregate actual occurrences of corrosion maintenance and activity to define a minimum level of corrosion costs in each maintenance area. Statistical methods are then employed to bridge any significant gaps between the top-down and bottom-up figures to derive a final estimation for the cost of corrosion.

The CPC IPT–approved cost estimation method also segregates costs by their source and nature, using the following three schemas:

1

Depot maintenance (DM)—corrosion costs incurred while performing depot maintenance
Field-level maintenance (FLM)—corrosion costs incurred while performing organizational or intermediate maintenance
Outside normal reporting (ONR)—corrosion related costs not identified in traditional main-tenance reporting systems5

2

Corrective—costs incurred while addressing an existing corrosion problem
Preventive—costs incurred while addressing a potential future corrosion issue

3

Structure—direct corrosion costs incurred by the body frame of a system or end item
Parts—direct corrosion costs incurred by a removable part of a system or end item

We have estimated the current total cost of corrosion for DoD using information from the completed studies and fiscal year (FY) 2006 data as a baseline. Those results are presented in Table 2.

Table 2 - Estimated Total Cost of Corrosion for DoD ($ in millions)
*Percentages in Column B may not calculate exactly due to rounding of maintenance and corrosion costs.

The total cost of corrosion for DoD was estimated in the following manner:

  • For study segments completed using FY 2006 data (highlighted in blue above), we used the maintenance and corrosion costs from the studies.
  • For study segments completed using other than FY 2006 data (highlighted in green above), we calculated the actual maintenance costs for FY 2006 and applied the corrosion percentage from the completed studies to the FY 2006 maintenance costs.
  • For study segments that have not yet been reviewed (highlighted in brown above)—ammunition, small arms, some communications equipment, Navy and Air Force ground vehicles and Army watercraft—we calculated the actual maintenance costs for FY 2006 and applied the overall service corrosion percentage from the completed studies.

Although applying a composite corrosion percentage to the “other equipment” segments is not as precise as measuring the actual corrosion costs for those study segments, it yields a useful measure of the overall corrosion costs, and the estimates are most likely conservative.

For example, the Army’s composite corrosion percentage from Table 2, which we used to estimate the corrosion costs for “Army—Other equipment,” is 16 percent. This is a composite percentage from the Army ground vehicle study, which used FY 2006 data, and the completed Army aviation/missile study, which used FY 2005 data. A significant portion of the “other equipment” maintenance costs are for Army watercraft, which are continually exposed to a corrosive salt water environment.

One could argue that applying the 16 percent corrosion factor to the maintenance costs for that equipment underestimates the corrosion cost. By applying the service percentage to “other equipment,” the corrosion costs for some items might be overestimated, for others it might be underestimated; therefore, the estimate is as accurate as possible, given the data collected.

Corrosion-related costs as a percentage of total maintenance costs (see Table 2) for DoD is 23 percent. This includes both infrastructure and facilities (15.1 percent) and weapon systems and equipment costs (24.0 percent). That means the corrosion cost for infrastructure and facilities is $1.768 billion, and the corrosion cost for weapon systems and equipment is $20.732 billion. Of the total cost of corrosion for DoD of $22.5 billion, $20.925 billion is derived from the maintenance records from the services’ various databases, and $1.575 billion is outside normal reporting.

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